Simplex Castings Ltd.

Key Financial Performance (Q1 FY27 ended 30th June 2026)

  • Revenue from operations stood at ₹60.95 crore, registering a strong ~35% year-on-year growth from ₹45.21 crore in Q1 FY26.
  • Revenue grew ~11% sequentially from ₹54.76 crore in Q4 FY26.
  • EBITDA increased ~25% year-on-year to ₹11.52 crore compared with ₹9.15 crore in Q1 FY26, with an EBITDA margin of 18.89%.
  • Profit After Tax (PAT) stood at ₹6.86 crore, up ~45% year-on-year from ₹4.74 crore.
  • PAT margins improved to 11.25% from 10.48% in Q1 FY26.

Operational and Strategic Highlights

Order Book & Visibility:

  • The near-term order book has expanded to roughly ₹150+ crore, compared to a historical range of ₹80-100 crore, providing strong revenue visibility.

Capacity & Utilization:

  • Current capacity utilization is at 50-60%.
  • The company is targeting to reach at least 80% utilization by the end of the next financial year (FY28).

Capital Expenditure (CAPEX):

  • Capital work in progress is roughly ₹30 crore, deployed for both working capital needs and capital expansion.
  • The CAPEX is currently happening at the Tedesara Unit (Rajnandgaon Plant) and is expected to be completed within the current financial year (FY27).

Growth Strategy (Simplex 2.0):

  • The strategy focuses on participating in larger projects, manufacturing more complex and higher-value products, and diversifying the revenue base.
  • Key growth verticals include Railways, Defence, Oil & Gas, and Shipbuilding.
  • The company aims to extract greater productivity from its existing manufacturing platform.

Railways Business:

  • The company is planning to manufacture around 200 casted bogies per month, contingent on Indian Railways placing wagon orders with wagon builders, expected around August-September 2026.
  • Historically, 20% of bogie orders came directly from railways, and 80% from wagon builders.
  • This vertical is expected to contribute significantly to future revenue.

Defence & Shipbuilding:

  • The company is executing an order for 5 sets of castings for Mazgaon Dock, valued at approximately ₹4.5 crore, with another order for ~₹8 crore in the pipeline.
  • The company holds certifications from the American Bureau of Shipping and Indian Bureau of Shipping.
  • Defence and shipbuilding are targeted to constitute 10-15% of business in the future.
  • The approach involves collaborating with ordnance factories (e.g., GCF, Jabalpur) to support their production expansion.

Power Sector & Fabrication:

  • The company is receiving strong offers from the power sector, including from BHL and L&T, and expects about ₹100 crore of business from this sector.
  • A focus is on fabricated locomotive bogies, with an expected turnover of ₹60-70 crore.

Working Capital Management:

  • A strategic priority is to improve working capital efficiency.
  • The company is shifting its product mix at Unit 1 towards faster-moving products with shorter execution cycles (30-45 days), such as railway bogies, which place lower pressure on working capital.
  • A similar strategy is planned for Unit 3.
  • The company is registered on platforms like RXIL and Invoice Mart, which allow for bill discounting at an interest rate of ~5-5.5% and enable payments within 30-35 days of dispatch.
  • The goal is to reduce the operating cycle to a target of 60-70 days by FY28.

EPC Business:

  • The company is exploring re-entering the EPC project space, focusing on packages within the metallurgical and power sectors that provide 30-40% load to its factories.
  • It is targeting order sizes of ₹100-150 crore, executable over ~2 years, with margins above 15-20%.
  • This business would be financed through accruals and existing bank guarantee limits, not requiring further fundraisers.

Long-Term Guidance & Outlook:

  • FY27 Revenue Guidance: Reaffirmed at ₹300 crore.
  • FY28 Revenue Target: ₹500 crore. This growth is expected to be driven by organic expansion into new verticals (railways, power fabrication, defence) and potentially through inorganic growth or new ventures, not just the two existing units.
  • Margin Outlook: Management expects to maintain or improve PAT margins by focusing on more complex, niche products and being selective with orders, even as new verticals like railways and power fabrication operate on tender-based, similar margins.

Fundraising & Financial Strategy

  • A recent fundraise is deemed sufficient to support growth up to the ₹500 crore revenue target, with no immediate plans for further dilution.
  • Future expansions are planned to be financed through internal accruals.

Other Updates

  • The company's foray into a Green Hydrogen-powered DRI plant project (a ₹300 cr project with a ₹161 cr grant) was discontinued due to a GST implication dispute with the government.
  • The company has no ongoing royalty payments from past technology collaborations.

Capital Structure Impact

No specific change to the capital structure was disclosed in this transcript. The discussion focused on operational growth and working capital efficiency.

Cash Flow Implications

The primary cash flow implication discussed is the expected improvement in free cash flow generation as working capital becomes more efficient, converting operating cash generation into free cash flows instead of being tied up in operational cycles.

Forward-Looking Commentary

Management commentary was explicitly forward-looking, providing revenue guidance for FY27 (₹300 cr) and FY28 (₹500 cr), margin expectations, working capital targets (60-70 days by FY28), and capacity utilization targets (80% by FY28).